Accelerate cuts rent income
Accelerate Property Fund, the co-owner of Fourways Mall, the largest shopping centre in the country, said on Thursday it had been forced to reduce rent and even offer rent-free periods as shop owners battle with subdued consumer sentiment and load-shedding.
Accelerate Property Fund, the co-owner of Fourways Mall, the largest shopping centre in the country, said on Thursday it had been forced to reduce rent and even offer rent-free periods as shop owners battle with subdued consumer sentiment and load-shedding.
A persistently weak economy, tenants battling to grow sales and the Covid-19 pandemic had made it harder for companies such as Accelerate to grow its dividends and to reward its investors.
Accelerate is positioning itself as the largest commercial landlord in the northern Johannesburg suburb of Fourways, which COO Andrew Costa said was the most exciting and fastest-growing “live and work” node in SA.
Costa said the group had faced challenging market conditions made worse by the viral pandemic so soon after reopening Fourways Mall following a multimillion-rand upgrade in August last year.
Fourways now has nearly 200,000m² of retail space, including the Leroy Merlin home-improvement store, which is not owned by Accelerate. Accelerate and its development partner Azrapart spent five years expanding the mall. Each entity owns 50% of the R9bn asset.
In a trading update, the group said it had seen rental reversions of 13.2% in its 10 months to endJanuary, but had also achieved a tenant retention rate of 93.5%, which it said would put pressure on income in the short term but pay off in future.
The group said that vacancies had remained stable at 9.9%, driven by a concerted effort to fill vacancies, but mall owners were battling to fill spaces or convince tenants to renew leases at higher rentals.
It said that SA’s 21-day lockdown from midnight on Thursday was expected to put even more pressure on the retail and property sectors, and it might have to adjust its capital retention policy, which affected dividends.
ACCELERATE’S SHARE PRICE HAS LOST ALMOST TWO-THIRDS SO FAR IN 2020
The group has a portfolio of about 60 properties valued at R12.7bn, including Cedar Square Shopping Centre in Fourways, the Buzz Shopping Centre, also in Fourways, and the Portside office building on Cape Town’s Foreshore. It also has exposure to commercial property in Austria and Slovakia.
Accelerate’s share price has lost almost two-thirds so far in 2020, while the JSE’s property index has almost halved.
Accelerate was 55c at close of trade on Thursday.